31 August 2023

Pelatro Plc

("Pelatro" or the "Company")

Proposed cancellation of admission to trading on AIM and notice of General Meeting

Further to the announcement of 29 August 2023, Pelatro announces that the Board has concluded that it is in the best interests of the Company and its shareholders to seek shareholder approval to cancel the admission of the Company's Ordinary shares to trading on AIM (the "Cancellation"). In accordance with Rule 41 of the AIM Rules for Companies ("Rule 41"), the Company has notified the London Stock Exchange of the date of the proposed cancellation.

The Directors consider that the Cancellation is in the best interests of the Company and its Shareholders as a whole and intend unanimously to recommend that shareholders vote in favour of the resolutions to effect the Cancellation to be proposed at a General Meeting of the Company to be convened for this purpose. Pursuant to Rule 41, the Cancellation requires the approval of not less than 75% of the votes cast by Shareholders (whether present in person or by proxy) at a General Meeting to be convened for the purpose and to be held at the company's office at 49, Queen Victoria Street, London EC4N 4SA at 11.00 am on 21 September 2023. If the relevant resolutions are passed at the General Meeting it is anticipated that the Cancellation will become effective, following the issue of a Dealing Notice, at 7.00am on 29 September 2023. A circular containing further information on the background to, reasons for, and implications of the Cancellation will be posted to shareholders presently, together with a notice convening the General Meeting.

Background to and reasons for the Cancellation

The Directors have undertaken a review to evaluate the benets and drawbacks to the Company and its Shareholders of retaining the admission to trading of the Ordinary Shares on AIM. This review has included, amongst other matters, the public market share trading and valuation of the Company, the increasing costs of maintaining a public quotation and especially the inability to raise funds in the London market (including most recently despite the likely working capital shortfall experienced by the Group), which was one of the primary reasons for the Company seeking admission to AIM in the first place. For these reasons, the Directors have concluded that the Cancellation are in the best interests of the Company and its Shareholders as a whole. Further details of the background to and reasons for the Cancellation are set out below.

The Directors believe that a number of factors have impaired investor sentiment towards the Company, including, amongst others: (a) the Company's exposure to events outside its control impacting its recent trading performance; (b) current market conditions and the lack of investor appetite for the Company; and (c) lack of UK market liquidity. Further, the Directors believe that growing the Group's business within the parameters of a publicly quoted company will be more challenging due to: (a) continuing adverse sentiment towards the Company as referred to above; and (b) the legal and regulatory burden associated in maintaining the Company's AIM admission. These factors have all led the Directors to consider that the Company's business may no longer be appropriate for that of a publicly quoted company.

Due to the setbacks suffered by the Company as a result of recent events, the Directors believe that having access to capital in the near to medium-term may be prudent to ensure that the Company can capitalise successfully on future opportunities and growth and, as a result of the factors set out above, the Directors consider it unlikely that an equity fundraise using the public markets would successfully raise additional capital (or provide the optimal platform to do so), should it be so required.

More generally, the UK small and micro-cap public markets have changed signicantly since the Company's IPO and the Directors believe that the Company's current public market valuation does not reect the underlying potential of the business with the result that growth prospects are more readily accessible and managed in a private market environment.

There has been limited liquidity in the Ordinary Shares for some time and, as a result, the Directors believe that continued admission to trading on AIM no longer sufciently provides the Company with the advantage of providing access to capital in the medium to longer-term, nor provides liquidity to investors. As a result, the Directors have concluded that the most likely source of future funds would be through private capital and debt funding.

The considerable cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM is, in the Directors' opinion, disproportionate to the benets of the Company's continued admission to trading on AIM. Given the lower costs associated with private limited company status, it is estimated that the Cancellation will materially reduce the Company's recurring administrative and adviser costs by approximately $400,000 per annum, which the Directors believe can be better spent supporting growth in the Group's business.

As a result of the limited liquidity in Ordinary Shares highlighted above, the admission of the Ordinary Shares to trading on AIM does not necessarily offer investors the opportunity to trade in meaningful volumes or with frequency within an active market. With low trading volumes, the Company's share price can move up or down signicantly following trades of small volumes of Ordinary Shares. In the opinion of the Directors, the adverse share price performance is detrimental to the perception of the Group amongst customers and other partners, which, in turn, has negatively impacted its staff morale and industry reputation as highlighted above.

Following careful consideration, the Directors therefore believe that it is in the best interests of the Company and Shareholders to seek the proposed Cancellation.

Process for, and principal effects of, the Cancellation

The Directors are aware that certain Shareholders may be unable or unwilling to hold Ordinary Shares in the event that the Cancellation is approved and becomes effective. Such Shareholders should consider selling their interests in the market prior to the Cancellation becoming effective.

Under the AIM Rules, the Company is required to give at least 20 clear Business Days' notice of Cancellation. Additionally, Cancellation will not take effect until at least ve clear Business Days have passed following the passing of the Cancellation Resolution. If the Cancellation Resolution is passed at the General Meeting, it is proposed that the last day of trading in Ordinary Shares on AIM will be 28 September 2023 and that the Cancellation will take effect at 7.00 a.m. on 29 September 2023.

The principal effects of the Cancellation will include the following:

•              there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares;

•              it is possible that, following the publication of this Document, the liquidity and marketability of the Ordinary Shares is reduced and their value adversely affected (however, as set out above, the Directors believe that the existing liquidity in the Ordinary Shares is in any event limited);

•              the Ordinary Shares may be more difcult to sell compared to shares of companies traded on AIM (or any other recognised market or trading exchange);

•              in the absence of a formal market and quote, it may be difcult for Shareholders to determine the market value of their investment in the Company at any given time;

•              the regulatory and nancial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

•              Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notied of price sensitive information or certain events and the requirement that the Company seek shareholder approval for certain corporate actions, where applicable, including substantial transactions, reverse takeovers, related party transactions and fundamental changes in the Company's business, including certain acquisitions and disposals;

•              the levels of disclosure and corporate governance within the Company may not be as stringent as for a company quoted on AIM;

•              the Company will no longer be subject to UK MAR regulating inside information and other matters;

•              the Company will no longer be required to publicly disclose any change in major shareholdings in the Company under the Disclosure Guidance and Transparency Rules;

•              the Takeover Code will cease to apply to the Company following the Cancellation;

•              finnCap will cease to be nominated adviser to the Company;

•              whilst the Company's CREST facility will remain in place immediately post the Cancellation, the Company's CREST facility may be cancelled in the future and, although the Ordinary Shares will remain transferable, they may cease to be transferable through CREST (in which case, Shareholders who hold Ordinary Shares in CREST will receive share certicates);

•              stamp duty will be due on transfers of shares and agreements to transfer shares unless a relevant exemption or relief applies to a particular transfer; and

•              the Cancellation and Re-registration may have personal taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

For the avoidance of doubt, the Company will remain registered with the Registrar of Companies in England & Wales in accordance with and, subject to the Companies Act, notwithstanding the Cancellation.

The Company currently intends to continue to provide certain facilities and services to Shareholders that they currently enjoy as shareholders of an AIM company. The Company will:

•              continue to communicate information about the Company (including annual accounts) to its Shareholders, as required by the Companies Act; and

•              continue, for at least 12 months following the Cancellation, to maintain its website, www.pelatro.com and to post updates on the website from time to time, although Shareholders should be aware that there will be no obligation on the Company to include all of the information required under the Disclosure Guidance and Transparency Rules, AIM Rule 26 or to update the website as required by the AIM Rules.

Matched Bargain Facility

In the event that the Cancellation becomes effective, the Company intends to put in place a Matched Bargain Facility to assist Shareholders to trade in the Ordinary Shares to be put in place from the date of Cancellation. The Matched Bargain Facility will be provided by J P Jenkins. J P Jenkins is an appointed representative of Prosper Capital LLP, which is authorised and regulated by the Financial Conduct Authority.

Under the Matched Bargain Facility, Shareholders or persons wishing to acquire or dispose of Ordinary Shares will be able to leave an indication with J P Jenkins, through their stockbroker (J P Jenkins is unable to deal directly with members of the public), of the number of Ordinary Shares that they are prepared to buy or sell at an agreed price. In the event that J P Jenkins is able to match that order with an opposite sell or buy instruction, it would contact both parties and then effect the bargain (trade). Should the Cancellation become effective and the Company puts in place the Matched Bargain Facility, details will be made available to Shareholders on the Company's website at www.pelatro.com

The Matched Bargain Facility will operate for a minimum of six months after Cancellation. The Directors' current intention is that it will continue beyond that time but Shareholders should note that it could be withdrawn and therefore inhibit the ability to trade the Ordinary Shares. Further details will be communicated to the Shareholders at the relevant time.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation becoming effective. As noted above, in the event that Shareholders approve the Cancellation, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 28 September 2023 and that the effective date of the Cancellation will be 29 September 2023.

Board Composition

There will be no change to the composition of the Board immediately following the Cancellation. Harry Berry and Pieter Verkade (being the two Non-Executive Directors of the Company) have, however, notied the Company that they are considering stepping down from their roles as directors in the period shortly following the Cancellation. A key purpose of their current positions is to bring independence to the Board, and help ensure that the Company meets its obligations under the AIM Rules, and such a role is unlikely to exist or be economically or operationally justied should the Cancellation take place.

Recommendation

The Directors consider that the Cancellation is in the best interests of the Company and its Shareholders as a whole and, therefore, unanimously recommend that you vote in favour of the Resolutions at the General Meeting, as they intend to do in respect of their own beneficial holdings amounting to 12,933,553 Ordinary shares representing approximately 13.8 per cent. of the issued share capital.

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